\tTake a look at this chart of GVZ plotted along with its Bollinger Bands…<\/p>\n
\t![\"\"](\"http:\/\/assets.jeffclarktrader.com\/ee-assets\/channels\/articles\/Screen_Shot_2017-11-07_at_10.58.02.png\")
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\tBollinger Bands help identify the most probable move for a stock or an index. It’s uncommon for a chart to move much outside of its Bollinger Bands. So, when it does happen, it’s an extreme move – and it’s a move that will likely reverse.<\/p>\n
\tThe red circles on the chart show each time over the past year that GVZ closed above its upper Bollinger Band. This indicates extreme fear among investors, and an overbought condition for the gold sector.<\/p>\n
\tThe blue circles indicate each time GVZ closed below its Bollinger Bands. That shows extreme complacency and an oversold condition for the gold sector.<\/p>\n
\tNow look at how the VanEck Vectors Gold Miners Fund (GDX) performed after each of those signals…<\/p>\n
\t![\"\"](\"http:\/\/assets.jeffclarktrader.com\/ee-assets\/channels\/articles\/Screen_Shot_2017-11-07_at_10.59.55.png\")
<\/p>\n
\tThree of the past four sell signals marked almost the exact top of the gold stock rallies. All three of the past year’s buy signals occurred near the exact low for GDX.<\/p>\n
\tOn Friday, GVZ closed below its lower Bollinger Band. Investors are complacent. They’re not worried and they see little or no reason to be buying gold and gold stocks. The three previous times we’ve seen this condition this year, gold stocks were sharply higher 30-60 days later.<\/p>\n
\tWe may not have hit the exact bottom of this particular gold stock decline. But I’ll bet that we’re close enough to a bottom that the gold sector will be higher two months from now.<\/p>\n
\tAggressive traders should consider adding some gold stock exposure on any further weakness.<\/p>\n
\tBest regards and good trading,<\/p>\n
![](\"https:\/\/casey-assets.s3.amazonaws.com\/images\/misc\/jeff-clark-signature.png\")
<\/div>\n\tJeff Clark<\/p>\n
\tReader Mailbag<\/h2>\n
\tIn today’s mailbag, a subscriber writes in with what they’ve learned about overleveraging…<\/em><\/p>\n \t\tLike many others I have followed your advice for a few years during and after Stansberry & Associates and very much appreciate your guidance. One thing I have learned, only too slowly, is how to manage risk in trading options. For example, I sold a few ABX put options per your Delta Direct<\/em> suggestions (and I thought it was not a huge number of options which I sold). Then, yesterday, I was notified by my brokerage firm that a couple of my put options were assigned\/exercised.<\/p>\n \t\tI was surprised that this would happen (being two weeks ahead of option expiration date) and I also realized that the total number of put options I sold would result in buying many more shares than I would normally be willing to purchase. In other words, I think I have “over-leveraged” my options trades. I remember your advice several times in the past against over-leveraging. This time it took real dollars to make it sink in.<\/p>\n \t\tSo from now on, I will be much more careful in choosing the number of put options to sell, or options to buy. Thank you for your efforts and guidance.<\/p>\n\n